international litigation blog

On 14 June 2017, Hong Kong passed key legislation allowing third party funding in arbitral proceedings and mediation seated in Hong Kong, as well as for work carried out in Hong Kong in arbitral proceedings seated elsewhere.

Hong Kong therefore joins Singapore, which also passed a similar legislation earlier this year. However, contrary to the newly enacted law in Singapore, Hong Kong embraces a wider definition of “third party funder“. Indeed, Hong Kong extends the category of a potential third party funder to any “person who is a party to a funding agreement […] and who does not have an interest recognized by the law in arbitration other than under the funding agreement“. Hong Kong therefore does not only limit the notion of third party funder to professional funders. Based on this definition, it is clear, however, that lawyers who provide legal services to a party to an arbitration case remain prevented from funding this case. Hence, contingency or conditional fee agreements to the effect that no fees will be charged if the client’s case is unsuccessful remain prohibited under Hong Kong law. The newly adopted law also encourages the issuance of a code of conduct setting out ethical and financial standards for third party funders.

In the meantime, the Paris Bar Council also passed a resolution indicating support for third party funding and confirming that such a financial arrangement was a positive element for access to justice in international arbitration, as it restores equality of arms between the parties insofar as it allows a party to initiate a claim even if this party does not have the financial means to finance those costly proceedings. The resolution adopted by the Paris Bar Council also emphasises that the current state of French Law does not prohibit third party funding for international arbitration and details the ethics obligations owed by counsel representing a funded party.

On 8 June 2017, the Brussels Court of First Instance handed down its decision on the legality of the seizures of assets belonging to Russia carried out by Yukos Universal Ltd (YUL) in the context of the Belgian enforcement proceedings of the Yukos case. As you certainly know, the Yukos case refers to an arbitral saga that saw three arbitral tribunals issuing three arbitral awards which cumulatively ordered Russia, in 2014, to pay USD 50 billion as reparations for the irregularities committed during the nationalisation of the Russian oil company Yukos (click here for a report of the hearing that took place before the Brussels Court of First Instance in November 2016).

Following the issuance of the award in 2014 in its favour, YUL (one of Yukos‘s former shareholder) sought the exequatur and the enforcement of the award in several countries, including Belgium. The Belgian exequatur of the award was granted to YUL in June 2015. In addition, YUL was also allowed to freeze and seize several key assets belonging to Russia as well as assets belonging to two Russian press agencies (ITAR TASS and Ria Novosti).

As a response to those precautionary seizures, Russia filed a third-party opposition before the Brussels Court of First Instance in which it challenged the legality of those seizures. As explained earlier, Russia’s main argument in opposing those seizures was that the three awards rendered in favour of Yukos‘s former shareholders had all been annulled by the District Court of the Hague (the Netherlands being the seat of the arbitration) in April 2016. As a consequence of this judgment by the District Court of the Hague, Russia argued that the Belgian exequatur order which had initially been granted to YUL in June 2015 was null and void and YUL was thus not entitled to proceed with the seizure of Russia’s assets.

In its decision of 8 June 2017, the Brussels Court of First Instance fully sided with Russia on this point.READ MORE

On 4 May 2017, the Court of Justice of the European Union (the CJEU) handed down a judgment interpreting and clarifying the rules on parallel litigation and lis pendens in trans-European civil and commercial litigation.

As you certainly know, parallel litigation and lis pendens refer to a situation that occurs when different legal proceedings relating to the same object and cause of action are brought between the same parties in the courts of different forums. In such a situation, in order to reduce concurrent proceedings before the courts of various Member States and to avoid irreconcilable decisions, Article 27 and following of the Regulation No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the Brussels Regulation) provide that the first court seized with the dispute shall have the exclusive power to establish whether it is competent to rule on the particular dispute. It is only if this first court finds that it does not have jurisdiction to hear the case that the other courts will regain the power to hear that case. However, if the court first seized has confirmed its jurisdiction then the other courts shall decline jurisdiction in favour of that court.

In the case at hand, the CJEU was asked to interpret Article 27 and following of the Brussels Regulation in order to examine whether interlocutory proceedings brought before the courts of one Member State pre-empted legal proceedings to be brought before the courts of the other Member States in a dispute involving the same parties and the same cause of action.READ MORE

Spring and the month of May seem to have inspired the U.S. Supreme Court (the Supreme Court) justices. In less than three weeks, the Supreme Court rendered three interesting opinions with respect to arbitration and international litigation:

Kindred Nursing Centers Partnership v. Clark (on whether state-law could require that a PoA expressly refer to arbitration agreements before an attorney-in-fact can bind his or her principal to an arbitration agreement);

Water Splash, Inc. v. Menon (on whether the Hague Service Convention allows service of process by postal channels).

On 16 May 2017, the Court of Justice of the European Union (the CJEU) delivered its long-awaited opinion (the Opinion 2/15) on the allocation of competences between the European Union (the EU) and its Member States for the conclusion of the EU-Singapore Free Trade Agreement (the EUSFTA).

As you may know, the core issue in this Opinion was whether the EU had an exclusive competence to conclude the EUSFTA and similar free trade agreements (FTAs) (meaning that the EU could act unilaterally on this issue) or whether the EU shared this competence with the European Member States.

In a judgment dated 27 April 2017, the Belgian Constitutional Court (the Constitutional Court) largely confirmed the validity of the Belgian legal provision on State immunity from execution (Article 1412quinquies of the Belgian Judicial Code).

Exceptions to that rule are, however, possible if very strict conditions are met: a party wishing to seize the assets belonging to a State needs to obtain a prior authorisation from a judge (juge des saisies). This judge will only authorise the seizure if (i) the foreign State has “expressively” and “specifically” consented to the seizure of the assets; (ii) the foreign State has specifically allocated those assets to the enforcement of the claim which gives rise to the seizure; and (iii) the assets are located in Belgium and are allocated to an economic or commercial activity.